DSV had a less than exciting 2024, something it blames on the “challenging macroeconomic and geopolitical situation”. Revenue did rise by 11% for the full year to DKK167,106m (US$23bn), and jump by 19.5% for the fourth quarter year-on-year but gross profit was up only 3.6% in fourth quarter year-on-year and down by 1.2% for the full year. Of course, this is another signal that although freight rates were higher over the period, the greater revenues were largely retained by the air and sea freight operators rather than the freight forwarders.
Full year profits at DSV reflected this, with Earnings Before Interest, Depreciation and Tax(EBIT) before ‘special items’ was down by 8.4% and profit before tax fell by 22% to DKK13,423m (US$1.87bn). That said there is some evidence that performance was improving by the fourth quarter.
At the ‘Air and Sea’ freight forwarding business the fourth quarter saw what DSV described as a “rebound”. Volume of freight handled increased by 7% year-on-year but yields were “stable” leading to rise in EBIT of 8.4%. This was a contrast with the full year that saw EBIT fall by 9.9%. DSV explain the improvement in the fourth quarter as due to “commercial initiatives aimed at our large accounts, especially within the technology and consumer verticals”.
The ‘Road’ trucking business was more difficult. Demand in Europe fell through 2024 even through it was never that strong to start with and US market conditions were not much better. Revenue was not too bad, increasing by 6% through the year, however gross profit fell by 2.1% and EBIT was down 7.4% year-on-year. The fourth quarter was worse, with EBIT down 33.4%.
The contract logistics ‘Solutions’ business was surprisingly similar to the Road business. Although revenue did increase by 11% for the year, EBIT was down 1% year-on-year, with the fourth quarter seeing a fall of 12.8%. DSV was candid about this business’ dynamics, commenting that “although demand in terms of volume is remains generally strong, DSV has not been so effective at making money from that demand”.
DSV is still digesting its acquisition of Schenker and so the company will continue to grow. It is to be assumed that it will execute this purchase with its normal speed and efficiency. However, 2024 illustrates that DSV is not perfect and is vulnerable to the vicissitudes of the market. Possibly this is pointer to the longer-term performance of DSV.
Author: Thomas Cullen
Source: Ti Insight
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